Switzerland

Key benefits

Switzerland is undoubtedly one of the most attractive countries in the world in which to live, work, and run a company. It offers a combination of political and economic stability, a clean and safe environment, and comparatively low personal and company tax rates. However the tax regime can be quite complex.

Benefits of registering a company in Switzerland:

  • Switzerland has a leading position among industrialized countries in enabling the acquisition of new skills and technologies in the growth sectors of the future;
  • Long-term, stable decision-making fundamentals, liberal legislation, protection of free competition and cooperative authorities encourage the establishment of headquarters and facilities in Switzerland for research and production activities;
  • Internationally recognized institutes consistently give the country top rankings for legal security, long-term stability, guaranteed protection of free competition and property ownership and minimal bureaucracy.  These fundamental criteria position Switzerland as an advantageous European location for establishing a business.
  • Switzerland has one of the most liberal and competitive economies in the world.  The banking industry is one of the most important sectors of the Swiss economy.  The laws regulating the banking system, and particularly the banking secrecy policies, offer extensive protection for domestic as well as foreign investors.
  • Switzerland continues to be one of the most attractive locations for foreign direct investment.  The country offers many advantages and benefits for business investors.
  • With respect to overall productivity, Switzerland ranks fifth among the world’s leading national economies.
  • The Swiss tax system is strongly influenced by the federal structure of the country.  Emphasis is on direct taxes.  By European standards, the tax burden in Switzerland is moderate – both for companies and individuals.

Procedure of company registration

Limited Liability Company (GmbH / Sarl)Stock Corporation (AG / SA)
  • Primarily used by small businesses because of the lower costs of registration and capital requirements.
  • At least 2 shareholders and CHF 20,000 initial capital is required.
  • A local Swiss Director is required.
  • Utilised for medium to large sized companies
  • 3 founders required with a minimum share capital of CHF 100,000 with half of this amount requiring to be paid-up.
  • A local Swiss Director is required

Summary of requirements for company registration in Switzerland.

General Information
Type of CompanyLimited Liability Company (GmbH) / Sarl)Stock Corporation (AG / SA)
Timescale to incorporateApprox. 2 – 3 weeksApprox. 10 working days
Double Tax Treaty Access:Switzerland has Double Taxation Treaties with over 80 countries, more than 30 of which are based on the OECD model.
Directors
Minimum No. Required1 – Corporate Directors not permitted. A local director is required. If more than 1 director is appointed the majority must be Swiss Citizens and resident in Switzerland.1 – Corporate Directors not permitted.
Local Director RequiredYesYes
Publicly accessible informationYesYes
Location of MeetingsLocalLocal
Shareholders
Minimum No. Required2 – a GmbH does not have shares, just private equity therefore 2 ‘members’ are required. 
Publicly accessible informationYesYes
Location of MeetingsLocalLocal
Company Secretary
RequiredNoNo
Local Secretary RequiredN/AN/A
Registered Office RequiredYes in the Canton of Registration. 
Share Capital
Standard CurrencyCHF (Swiss Franc)CHF (Swiss Franc)
Standard Authorised Share CapitalCHF 20,000 – no shares but the owners’ equity participation is registered in the Commercial Register.CHF 100,000
Minimum Paid Up CapitalMinimum of 20% of the nominal capital or 20,000 CHF (whichever is higher).Minimum of 20% of the nominal capital or 50,000 CHF (whichever is higher). The share capital is transferred to a blocked account at a Swiss bank until the company is incorporated.
Accounting & Compliance
Requirements to prepare AccountsYesYes
Requirement to File AccountsNo. Although there is no requirement to file Accounts they must be presented to the Shareholders and filed with the Tax Authorities.No. Although there is no requirement to file Accounts they must be presented to the Shareholders and filed with the Tax Authorities.
Requirement for AuditThere are 3 options:
  1. Ordinary Audit
  2. Limited Audit
  3. No Audit

Ordinary Audit:

An Ordinary Audit required if the company exceeds two of the following amounts in two consecutive years:

  • A balance sheet total of CHF 10 million
  • A turnover of CHF 20 million
  • An average of 50 full time employees per year

Also an Ordinary Audit is required if consolidated accounts are required.

Limited Audit:

  • For companies which fall between the Ordinary Audit and no audit threshold.

No Audit Required:

  • Less than 10 employees
  • All shareholders formally agreeing to opt out.
Local Auditor RequiredIf audit is required then it is required to be carried out by a Local Auditor.
Tax ReturnYesYes
Additional Information
Bank Account OpeningBank Accounts can be opened in a number of Swiss Banks without presence.

 

Tax and accounting regulations

Individual Tax Rate:
  • Residents subject to Cantonal and Federal Tax on their worldwide income.
Corporate Income Tax Rate:
  • No centralized taxation system and tax is imposed at both the Federal and Cantonal level.
  • The Federal rate is 8.5% on net income. Since income and capital taxes are deductible in determining taxable income the effective rate is 7.8%.
  • Taking into account both the Federal and Cantonal Tax the combined effective income tax rate is between 12% and 22% for companies subject to ordinary taxation.
  • The Canton with the lowest rate of Corporate Taxation is Zug.
Holding Company Regime:
  • The Holding Company tax privilege is granted to companies whose primary purpose is the holding of participations, when at least 2/3 of the total assets consist of investments in subsidiaries, or when 2/3 of income consists of dividends and must have no active trade in Switzerland.
  • A Holding Company is fully exempt from Cantonal taxes
  • The effective Federal tax rate on non-dividend income is 7.8%
Incentives:
  • A Mixed Company Tax Privilege is granted to companies with predominantly foreign business activities.
  • A business activity is deemed to be performed outside Switzerland if at least 80% of the total gross income is derived from foreign sources and 80% of expenses are incurred abroad.
  • Foreign source income of a mixed company is taxed at a combined effective rate of between 9-11% (including Federal Tax)
  • Swiss source income is taxed at ordinary Canton and Federal Tax Rates.
Capital Gains Tax Rate:
  • No specific capital gains tax levied at the federal level.
  • Capital gains on the sale of assets are treated as ordinary income regardless of how long the assets have been held
  • Capital gains derived from the sale of a participation in at least 10% in a resident or non-resident company benefit from participation relief if the participation has been held for more than 1 year.
Withholding Tax:Dividends:
  • Subject to 35% tax rate.
  • Under the Switzerland-EU Savings Agreement, which provides Switzerland access to benefits similar to those in the EU parent-subsidiary directive withholding tax is 0% on cross boarder payments of dividends between related companies residing in EU member states and Switzerland where capital participation is 25% or more and certain other criteria are met.
  • Many tax treaties provide for a 0% or 5% residual withholding tax rate for qualifying investments.
  • The repayment of nominal share capital and capital surplus is exempt from withholding tax.

Interest:

  • 35% but only in specific cases
  • No withholding tax is levied on interest. Exceptions apply to interest derived from deposits with Swiss banks and bonds which are subject to 35% in withholding tax at the Federal level.
  • Interest paid to a non-resident or on receivables secured by Swiss real estate is subject to tax at source.
  • The 35% withholding tax and tax at source can be reduced to 0% or 10% under a tax treaty with most investor countries.

Royalties:

  • 0%
Losses:
  • Losses may be carried forward for 7 fiscal years and may be used against any capital gains or income
  • Losses may not be carried back
VAT
  • 8%